ISLAMABAD: Pakistan’s oil industry has raised an alarm over Sindh’s decision to levy a 1.85% Infrastructure Development Cess (SIDC) on petroleum imports, cautioning that its exclusion from the official pricing mechanism could lead to country-wide fuel shortages and a price hike of up to Rs. 3 per litre.
In a strongly worded letter to the Secretary, Petroleum Division, the Oil Marketing Association of Pakistan (OMAP) lodged a “strong and urgent protest” on behalf of all OMCs, terming the proposed deduction “unlawful, financially unsustainable, and destabilizing for the market.”
The letter, dated October 17, 2025, cautioned that applying the SIDC without approval from the Oil and Gas Regulatory Authority (OGRA) or adjusting it in the regulated pricing mechanism would directly erode OMCs’ already thin margins and jeopardize their capacity to sustain operations.
“OMCs operate in a fully regulated environment where prices, margins, and cost components are determined under a prescribed formula. Imposing a 1.85% deduction without price adjustment is neither tenable under law nor consistent with the regulatory framework,” OMAP stated.
The association said OMCs have no legal or financial room to absorb additional costs that are not part of the OGRA-approved structure. The unadjusted levy, it warned, could lead to a supply chain breakdown, as importers and distributors face mounting financial pressure amid a volatile global oil market.
“OMCs are already operating under extremely thin margins that barely cover operational costs,” the letter added. “Deducting another 1.85% will make operations unviable, disrupt import schedules, and risk fuel shortages nationwide.”
Industry sources said the levy translating to roughly Rs2.5 to Rs3 per litre could delay cargo offloading, cause port congestion, and squeeze import liquidity, leading to possible scarcity at retail outlets. “If the deduction isn’t suspended or reflected in official prices, consumers could soon face both supply disruptions and higher fuel prices,” an industry source said.
The OMAP has urged the Petroleum Division to immediately suspend enforcement of the SIDC until it is legally reviewed and incorporated into the OGRA pricing formula. The association also warned that any premature implementation would violate the Petroleum (Marketing) Rules, the OGRA Ordinance, and established pricing principles.
Copies of the letter have been sent to the Chairman OGRA, Member (Oil), Member (Finance), DG (Oil), and senior officials in both the federal and Sindh governments for urgent action.
Industry sources also said that the SIDC, introduced under provincial law in the 1990s, has long been a contentious issue between Islamabad and Karachi. The federal government maintains that any such levy must first be built into the regulated petroleum pricing mechanism before enforcement.
The industry sources further warned that if not resolved through federal–provincial coordination, the 1.85% cess could raise prices by up to Rs3 per litre, tighten fuel supplies, and further fuel inflation, adding pressure to Pakistan’s fragile energy and fiscal landscape.
